Taxman faces £3.5m teacake bill. So when is a cake not a biscuit?

The European Court of Justice has ruled that the British retailer, Marks and Spencer, can claim back £3.5m in overpaid VAT on teacakes. For years, the British authorities defined a chocolate teacake as a biscuit - which attracts a sales tax - rather than a cake, which does not. So when is a cake not a biscuit? Duncan Bartlett reports:

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Long ago, the British tax authorities decided it was a biscuit, a luxury food eligible for sales tax. The supermarket maintained it was a cake, a basic food which is exempt from tax. The argument's been through many courts and the latest ruling from the European Court of Justice seems to come down on the cake side of the argument. Marks and Spencer should get a tax refund, said the judges.

But it's not over yet. The European Court says - ultimately, it's for the British authorities to decide the matter, meaning it's now likely to be discussed by Britain's highest court, the House of Lords. Marks and Spencer gave the decision a cautious welcome; in the meantime it continues to sell the teacakes and its customers can go on enjoying them regardless of the bitter legal arguments that they've caused.

Duncan Bartlett, BBC News, Brussels

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a leading supermarket chain
a number of popular, profitable supermarkets located in different areas, towns or even countries that have the same owner and sell the same goods

shortbread
a type of sweet biscuit made with a lot of butter

marshmallow
a confection made from syrup, sugar, gelatine and albumen (i.e. uncooked whites of eggs) beaten to a soft consistency

a luxury food
a type of food that people consider to be a delicacy, is expensive but not essential

maintained
said all the time, insisted

is exempt from tax
should not be taxed by law, is not eligible for sales tax

to come down on the cake side of the argument
to agree that a teacake is a cake after all

a tax refund
the extra tax that they have paid to be returned/paid back to them

gave the decision a cautious welcome
said the decision was right, however they were not sure if it would not change in the future

regardless of the bitter legal arguments
whether or not courts will continue to (angrily) discuss what a teacake is

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